Last week we announced our investment in a research/information service that complements Nielsen data with a new kind of measurement: rather than count households in which an exposure occured, IAG measures the quality of the exposure by surveying hundreds of thousands of TV and movie viewers every month on brand awareness, recall, and preference. By subscribing to IAG data feeds, brands can intellgiently allocate media budgets among the emerging ad platforms like web players, mobile video, and brand integration, precisely comparing each format's efficacy to the traditional 30-second spot. IAG subscribers include Toyota, Lexus, Nissan, GM, DaimlerChrylser, Kia, Verizon, Sprint/Nextel, American Express, Johnson & Johnson, P&G, Paramount, Sony, Merck, Pfizer, the NFL as well as the leading networks including NBC, CBS, FOX, WB, ESPN, Bravo, USA, Lifetime, TBS, TNT, and Food Network.

I recently joined the board of NextMedium, the emerging marketplace for Audited Brand Integration. NextMedium debuted its platform last month at the TV Upfronts, where demand from advertisers exceeded expectations. With the decline of the 30-second spot, the advertisers need a new medium for reaching broad audiences with visual exposures affiliated with content and characters that speak to the consumer. Integrating brands into TV, movies, and music videos offers them exposure that works regardless of whether the video is viewed live, on Tivo, through iTunes, on a phone or in a re-run. And the studios/networks need the new revenue stream to subsidize production as traditional ad revenues decline. (Click here to see Cisco's brand integrations in Fox's series 24, especially this one, where Chloe tells Division Chief that the terrorists couldn't hack CTU's system because "Cisco networks are self-defending.")

All indications from advertisers and producers point to audited brand integration as a hypergrowth market. (Indeed, roughly a third of IAG's revenue comes from their In-Program service.)

NextMedium takes product placement (in which products are supplied free for their production value) to the next level by creating a reliable, scalable, and measurable system for selling targeted exposures to brands. Producers propose integrations, advertisers bid for them, and the director selects the brand, incorporating creative concerns. Most importantly, NextMedium buyers pay for performance by bidding a price that varies based on exposures, using audited Nielsen data. I like to think of it, of course, as the Google of branded integration.

As Tivo kills commercials, the cable companies also seek alternative revenue streams. So Comcast, Cox and Time Warner are getting help from WorkMetro (where I have also recently joined the board), which launches localized job listing sites promoted by their cable partner.

Having invested early in Hotjobs, I'm well aware of the competition at the high end, but local job seekers and employers, who don't necessarily use PC's all day, have mostly remained loyal to their local newspapers, where job listings typically generate the profit. Now WorkMetro is taking a bite out of that market, bringing the benefits of the internet and video-on-demand job listings to TV audiences.

GoTV is the largest producer of made-for-mobile video entertainment. Sprint, Cingular, Nextel, Boost (and soon Verizon and many others) carry channels from GoTV offering news, sports, music, comedy, and more on demand, Tivo style. GoTV is the mobile distribution partner of ESPN, ABC (Lost, Alias...), Univision, iFilm, Sony, and others. Most of the content is produced in-house by GoTV's studio, led by Dan Tibbets who invented the "mobisode" while at Foxlab. The company's CEO is Dave Bluhm, a Bessemer EIR whom our mobile investor Ron Elwell recruited to run the company.

GoTV's servers automatically scale down the frame rate to suit your phone, but by the end of next year, CTIA projects that 22% of handsets in the US will be 3G and video-capable.

9 comments:

I believe there is a small typo in your most recent post. Howard Hartenbaum is not from DFJ but from DR (which you linked correctly though). Although the latter firm is quite closely associated with DFJ (the general partner is Tim Draper's father) DR was also not one of the Skype investors (which, however, was DFJ).

CTIA projects that 22% of handsets in the US will be 3G and video-capable.

It will be fascinating to see how we get to 45 million 3G handsets in 18 months.

Right now there are only 5 million 3G handsets in North America, and more troubling, there are only 2 million 3G data plans. Most people who buy a 3G handset buy it because it's a cool handset, not because of the data capabilities.

Mobile video will fail. Put your phone in your hand and hold it up and watch it for 5 minutes. Hold it close enough that the screen subtends a large enough angle that video would be larger than a postage stamp. After holding the phone in that position for 5 minutes ask yourself; Does my arm hurt?

I agree that CTIA projections are aggressive, but they're not off by more than a year. 3G will be a standard feature by then.

As for arm pain, that experiment has already been successfully conducted, with no harmful side effects, on several million users in Asia, and over a million users in the U.S. Mobile video ain't going away.

So what? I don't watch my old Sony Watchman either, but neither do I watch live TV anymore. I much prefer on-demand video and so I watch Tivo, and similarly when I'm mobile I watch my DVD player, my Creative Zen Vision player, and now my phone with GoTV.

Of the three experiences, Tivo (on a nice big screen), portable DVD (on a fair size screen) and GoTV (on a necessarily tiny screen), which is the least compelling from an audio/video impact standpoint?

In a world where all video is on demand, why would I choose to watch programming I actually care about seeing with a vastly inferior consumer experience? If I had a choice between watching the Deadwood premeire last night on my phone at 9PM on the train, or my 42 inch plasma at 10:13PM on my couch, why would I watch it on my phone?

The one place I think mobile video could actually gain traction in the US is live events. If we're talking about the World Series or a terrorist attack, the "now" factor of that coverage might be more important than the quality of the presentation.

Now if to the inferior consumer experience you add the issues of:

-Being on the carrier deck and sharing revenues at least 2-3 ways on a media product which already has shrinking margins

-Phone batteries that are not designed to be running the color LCD for an extra hour or two a day

-The very slow adoption of data plans in North America

-The audio issues. The need for headphones in most situations (the picture of 5 people sitting on a couch each watching their phone on the GoTV front page would lead to cacophony).

There will be a very tough road to hoe.

It's not like nobody has tried mobile video before. There was the aforementioned Sony Watchman (which had very little consumer adoption). Do you ever see anybody ever actually watching their video iPod (other than the "cool look, I can watch video on my iPod" example case). I'm on the NY subways every week, the NY subways are probably the densest concentration of portable entertainment device usage in the US. I see lots of iPod listeners, I see lots of people playing games on PSP's, I see no one watching their iPod or using their PSP for watching video.

There's no need to compare the experiences. Sometimes you just don't have a choice because the 42" plasma ain't with you when you're commuting, at work, or standing in line.

Yes, phones need 3G (camera penetration of phones reached 150m in only 2 years), the video needs to be formatted to make sense on a small screen (GoTV Studio does that), and it would help if batteries last longer (this will happen too).

As for you personal subway observations... despite the growing use of mobile video around the world, I must concede the argument and accept the claim that YOU, Erik, will never consume media this way. (Who has time for this?)

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The thoughts and opinions expressed herein belong to the author and do not necessarily reflect those of Bessemer Venture Partners or any of its affiliates (“Bessemer”). The material here is written on the author’s own time for his own reasons, and Bessemer has not reviewed or approved the information herein. Any discussion of topics related to Bessemer or its investment activities should not be construed as an official comment of Bessemer.